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TMI Blog2012 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... g of residential apartments on 40 cents of land owned by him, which was located in Kadakampally Village under survey no.227,228,250 & 251B/4. As per the said agreement, the assessee would receive 7800 Sq. Ft. of the constructed area and five car parking area in addition to a sum of Rs.18.00 lakhs. The said amount of Rs.18.00 lakhs was received by the assessee from the said company as under:- Rs.10,00,000/- during the financial year 2002-03 Rs. 5,00,000/- during the financial year 2003-04 Rs. 3,00,000/- during the financial year 2004-05 4. As the assessee had not filed his return of income, the AO issued notice u/s 148 of the Act on 14.2.2007 for the year under consideration. Thereafter, the AO completed the assessment by determining the long term capital gain at Rs. 65,17,513/-. The assessee challenged the said order passed by the AO before Ld CIT(A), but could not succeed. Hence, the assessee is in appeal before us. 5. The first issue relates to the validity of reopening of assessment. According to the assessee, the AO issued notices u/s 148 of the Act simultaneously for the assessment years 2003-04 (the year under consideration), 2004-05 and 2005-06 on identical reasons. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome in these three years. As stated earlier, it cannot be said that the AO had reached firm conclusion on the issue of year of assessment of the capital gains at the time of issuing notice u/s 148 of the Act. Hence, we are unable to agree with the contentions of the assessee on this point and accordingly dismiss the grounds raised with regard to the validity of the notice issued u/s 148 of the Act for the year under consideration. 6. With regard to the validity of assessment of capital gains in the year under consideration, i.e., in the assessment year 2003-04, the assessee has raised following contentions:- (a) The possession was given only on 21.4.2004 and hence the capital gain is assessable in the assessment year 2005-06 only. (b) Sec. 53A of the Transfer of Property Act has undergone a change with effect from 24.9.2001, i.e. about eight months prior to the date of agreement and according to the said amendment; unregistered agreements shall not have any effect for the purposes of sec. 53A of the Act. Hence the AO was wrong in invoking the provisions of sec. 2(47)(v) of the Act for the purpose of assessing capital gains during the assessment year 2003-04. (c)&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shall be handed over only after handing over of the assessee's portion of constructed area, yet the builder, under practical circumstances, cannot start construction unless the physical possession of land is handed over to him. Hence, for all practical purposes, we are of the view that the physical possession was handed over to the builder after entering into the agreement dated 14.4.2002. 10. It is also the alternative contention of the assessee that sec. 53A of the Transfer of Property Act shall not apply since the development agreement is not registered. It is pointed out by the assessee that the words "though required to be registered has not been registered", which was existing in sec. 53A was omitted with effect from 24.9.2001. 11. The assessee has taken this alternative plea, since the AO has invoked the provisions of sec. 2(47)(v) of the Act for the purpose of assessing the capital gains in the year under consideration. During the course of arguments, the Ld D.R submitted that the provisions of sec. 2(47)(vi) shall also equally apply to the impugned transaction. For the sake of convenience, we extract below the provisions of clause (v) and (vi) of sec. 2(47) of the Act: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of permissions were obtained during that year, the liability to pay capital gains tax accrued during the assessment year 1996-97. In this case, the agreement is a development agreement and in our view the test to be applied to decide the year of chargeability is the year in which the transaction was entered into. We have taken this view for the reason that the development agreement does not transfer the interest in the property to the developer in general law and, therefore, section 2(47)(v) has been enacted and in such cases, even entering into such a contract could amount to transfer from the date of agreement itself. .....At the same time, if one reads the contract as a whole, it is clear that a dichotomy is contemplated between the limited power of attorney authorising the developer to deal with the property vide para. 8 and an irrevocable licence to enter upon the property after the developer obtains the requisite approvals of various authorities. In fact, the limited power of attorney may not be actually given, but once under clause 8 of the agreement a limited power of attorney is intended to be given to the developer to deal with the property, then we are of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the assessment order is saved by the provisions of sec. 292B of the Act. 15. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was right in law in confirming the action of the assessing officer in assessing the capital gain in the assessment year 2003-04, since the development agreement was entered into on 14.4.2002. 16. The assessee has taken a plea that he has already declared capital gains in the assessment years 2005-06 and 2006-07 and hence the sale consideration declared in those years are required to be excluded in the assessment year 2003-04. In our view, the said plea is against the scheme of taxation under the Income tax Act. It is a well settled proposition of law that tax can be levied in a particular assessment year only in respect of the income assessable in that year. Hence, it is neither the prerogative of the assessee nor the prerogative of the assessing officer to offer/assess the income of a particular year in any other year. We have already held that the capital gain is assessable in assessment year 2003-04. Hence, the right course for the assessee would be to approach the tax authorities for exclusion of the income, which was w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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